Restoule v.

Canada
Summary
Keywords: Aboriginal Law, Crown Liability, Sui Generis Fiduciary Duty, Treaties,
Interpretation, Honour of the Crown, Crown Immunity, Justiciability, Civil Procedure,
Standard of Review, Limitation Periods, Costs, Royal Proclamation of 1763,
Constitution Act, 1982, Proceedings Against the Crown Act, 1962-63, S.O. 1962-63, c.

FACTS:

In 1850, the Anishinaabe entered into two Treaties with the Crown providing for the
cession of a vast territory in northern Ontario. As part of the Treaties, the Crown agreed
to pay a perpetual annuity to the Anishinaabe. This appeal centred on the nature of that
obligation.

The plaintiffs, who are beneficiaries of the Treaties, instituted two actions against
Canada and Ontario seeking declaratory and compensatory relief related to the
interpretation, implementation and alleged breach of the Treaties’ annuity provisions.
The actions, which are being tried together, were divided into three stages: Stage One
involved the interpretation of the Treaties and Stage Two considered the Crown’s
defences of Crown immunity and limitations. The appeal before the court was from the
partial judgments resulting from the Stage One and Stage Two decisions.

In her decision on Stage One, the trial judge held the Crown has a mandatory and
reviewable obligation to increase the Treaties’ annuities when the economic
circumstances warrant. To carry out that obligation, the trial judge found that the Crown
must: (i) engage in a consultative process to determine the amount of net Crown
resource-based revenues from the territories; and (ii) pay an increased annuity amount,
reflecting a “fair share”, if there are sufficient Crown resource-based revenues to allow
payment without incurring loss. The trial judge further determined that the principle of
the honour of the Crown and the doctrine of fiduciary duty impose on the Crown the
obligation to diligently implement the purpose of the Treaties’ promise.

In her decision on Stage Two, the trial judge held that Crown immunity and provincial
limitations legislation did not operate to bar the claims.

Ontario appealed from those decisions. Ontario argued that the trial judge erred in her
interpretation of the Treaties and in rejecting its defences of Crown immunity and
limitations. The appeals raised several issues. The Court issued joint reasons and three
sets of individual reasons, which are summarized in brief below. The decision is 300
pages long.
ISSUES:

Reasons of Lauwers and Pardu JJ.A.

(1) Did the trial judge err in her interpretation of the augmentation clause in the treaties?

(2) Did the trial judge err in finding that the doctrine of the honour of the Crown obliges
the Crown to increase the annuities as part of its duty to diligently implement the
treaties?

(3) Did the trial judge err in finding there was no implied term for the indexation of the
annuities?

(4) Did the trial judge err in her approach to remedies?

(5) Did the trial judge err in her costs award for the Stage One proceeding?

Reasons of Strathy C.J.O. and Brown J.A. (dissenting in part)

(1) Does the standard of review set out in Marshall apply when reviewing the trial
judge’s interpretation of the Robinson Treaties?

(2) When applying that standard, did the trial judge commit reversible error in her
interpretation of the Robinson Treaties?

(3) How does the honour of the Crown inform the Crown’s obligation to implement the
Treaties?

Reasons of Hourigan J.A.

(1) Is the appropriate standard of review when considering an appeal about the
interpretation of a historical Aboriginal treaty palpable and overriding error or
correctness?

(2) Did the trial judge err in finding that Canada and Ontario owe the Huron and
Superior Plaintiffs a fiduciary duty regarding the implementation of the augmentation
clauses in the Robinson Treaties?

(3) Can Ontario assert a defence of Crown immunity with respect to the Huron and
Superior Plaintiffs’ breach of fiduciary duty claims?

(4) Are the claims for breach of Treaty prescribed by the former Limitations Act (the
“1990 Limitations Act”)?
HOLDING:

Appeal from Stage Two proceeding dismissed.

Appeal from Stage One proceeding allowed in part.

REASONING:

Reasons of Lauwers and Pardu JJ.A.

Lauwers and Pardu JJ.A. concurred with the reasons of Hourigan J.A. on the issues of
fiduciary duty, Crown immunity and limitation defences. On the issue of the standard of
review for treaty interpretation, Lauwers J.A. concurred with Strathy C.J.O. and Brown
J.A., and Pardu J.A. concurred with Hourigan J.A.

(1) No.

The governing principles of treaty interpretation of historical treaties are common

intention, text, context and purpose. The Court applied its analysis to the Robinson-
Huron treaty. Reconciliation of Aboriginal and non-Aboriginal Canadians was the
objective of the legal approach to treaty rights and the “overarching purpose” of treaty
making and, perforce, treaty promises. Applying the governing principles, the Court
agreed that the trial judge’s interpretation of the augmentation clause was grammatically
and contextually correct. The trial judge had found that the augmentation clause did
make a distinction between “the collective annuity paid to the Chiefs and their Tribes
and a distributive amount that is paid to individuals from the collective amount and is
limited to £1 or such further sum as Her Majesty may be graciously pleased to order.

The trial judge did not err in her findings of the common intentions of the Treaty Parties.
The Court carefully evaluated the proximate evidence to discern what it revealed about
Crown intention when the Treaties were signed. Temporal proximity is not required for
post-treaty evidence to be admissible, but evidence from shortly after treaty formation is
more likely to reveal the parties’ interests and intentions. Post-treaty evidence and
evidence of the parties’ subsequent conduct can play a role in treaty interpretation but
must be treated with “extreme caution.” The trial judge did not err in her treatment of the
evidence concerning Crown intentions upon entering the Robinson Treaties or in
determining the common intentions of the party. The documents proximate to Treaty
formation on which Ontario relied were consistent with the trial judge’s interpretation of
the augmentation clause. The post-Treaty evidence was incapable of establishing a
contrary Crown intention. The trial judge did not make a palpable and overriding error in
her treatment of this evidence.

The trial judge did not err in her determinations on the existence and the extent of
Crown discretion in the augmentation clause. Ontario argued that the trial judge erred in
finding that the Crown’s discretion under the augmentation clause was not unfettered
and invoked the doctrine of justiciability, in part, to reinforce the claim. The doctrine of
justiciability imposes limits on judicial review of executive action. It is based on the
sense that there are public policy issues that are beyond the jurisdiction of the courts.
The Court found the doctrine of justiciability had no application to the case because: (1)
the court was not reviewing executive action in the abstract; (2) the justiciability
argument did not turn on the language of the augmentation clause but on the trial
judge’s adoption of the expression “fair share”; (3) there was a sense in which Ontario is
making an argument based on the possibly catastrophic impact of a large judgment on
the fiscal state of the Province, thereby reducing its capacity to deal effectively with its
other responsibilities. Justiciability was not a viable basis on which to find that the
augmentation clause gave the Crown unfettered discretion over whether and when to
increase the annuities.

(2) No.

The Court held that the trial judge correctly found that the honour of the Crown obliged
the Crown to increase the Treaties’ annuities as part of its duty to diligently implement
the Treaties. Consequently, the Court did not accept Ontario’s argument that the honour
of the Crown can be reduced to a series of procedural requirements.

The Court further held that the honour of the Crown can give rise to fiduciary duties in
circumstances where such duties are necessary and appropriate. However, fiduciary
duty had no work to do in this case that could not be done by honour of the Crown
alone.

(3) No.

The Court held that the trial judge correctly rejected Ontario’s proposal to supplant the
augmentation clause by implying a judicially created indexing term into the Treaties. An
indexing term could produce widely different results. Further, the Treaty beneficiaries
were not left with “an empty shell of a treaty promise” in the absence of the proposed
term.

(4) Yes.

The Court found that the counsel of caution should have prevailed in defining net Crown
Resource-Based revenues.

The Court also agreed with Ontario that the trial judge’s interpretation of the Treaties fell
short on the issue of “fair share”. The trial judge’s interpretation of the Treaties as giving
the Anishinaabe a “fair share” of the value of the territory went beyond a generous
construction of the Treaties.

(5)
Leave to appeal from the costs award in favour of the Superior Plaintiffs was refused.
Leave to appeal for the costs award in favour of the Huron Plaintiffs was granted.

Reasons of Strathy C.J.O. and Brown J.A. (dissenting in part)

Strathy C.J.O. and Brown J.A. concurred with the reasons of Lauwers and Pardu JJ.A.
on the issues of costs and indexing. They also agreed with the reasons of Hourigan J.A.
on the issues of fiduciary duty, Crown immunity and limitation defences.

(1) Yes.

The court held that Caron confirmed that, notwithstanding Sattva’s modification of the

standard of review for contract interpretation, the Marshall standard of review remains
in place, including the principle that legal inferences or conclusions regarding the
meaning of a historical treaty provision drawn by a trial judge from historical facts are
not entitled to deference on appellate review.

Further, the court held that two policy considerations also supported the application of
the Marshall standard: First, the Huron and Superior Plaintiffs’ efforts to functionally
analogize treaty interpretation with contract interpretation ignored the distinctive nature
of Aboriginal treaties under Canadian law. Second, treaties are solemn agreements that
are intended to last indefinitely.

(2) Yes.

In departing from the reasons of their colleagues, Strathy C.J.O. and Brown J.A.
concluded that the trial judge erred in finding the Robinson-Huron and Robinson-
Superior Treaty annuities were a “collective entitlement” containing within them a
separate “distributive amount” payable to individuals. That is, the trial judge erred when
she expressly found that the collective entitlement was greater than the sum of the
individual amounts that were to be distributed to members of the Robinson-Huron and
Robinson-Superior Treaty First Nations.

(3)

Strathy C.J.O. and Brown J.A. held that, at a minimum, the Treaty promises, together
with the honour of the Crown and principles of reconciliation, required the Crown to turn
its mind from time to time to consider an increase in the amount of the annuity in excess
of £1. The Crown had plainly failed to do so for 150 years since the one and only
increase in 1875.

Accordingly, they held the Crown’s refusal to exercise its discretion to augment the
annuities, even while recognizing that their purchasing power had been gutted by
persistent inflation, was a clear failure to diligently implement the Robinson Treaties’
promise.
Reasons of Hourigan J.A.

Hourigan J.A. concurred with the reasons of Lauwers and Pardu JJ.A. on the issues of
costs, indexing, the honour of the Crown, Crown discretion and remedies. He also
agreed with their conclusion on the trial judge’s interpretation of the Robinson Treaties,
however, like Pardu J.A., he did so on the basis that her interpretation was free from
palpable and overriding error and contained no extricable legal errors.

(1)

Hourigan J.A. held that only a standard of review of palpable and overriding error
provided the appropriate level of deference to trial courts when the role of historical
context and the nature of the interpretive process were considered.

(2)

The trial judge found that the Crown owed an ad hoc fiduciary duty, but not a sui
generis fiduciary duty, to the Treaty beneficiaries in the implementation of the
augmentation clauses.

Hourigan J.A. held the trial judge erred in law in finding the existence of an ad
hoc fiduciary duty in the circumstances. First, he found the trial judge significantly
expanded the scope of the ad hoc fiduciary duty between the release of her reasons
and the settling of the judgments. Second, he found the trial judge made a legal error by
concluding that the Crown agreed to act solely in the best interests of the Treaty
beneficiaries when upholding the Treaty augmentation clauses. This was not legally
possible because it would put the Crown, which is also responsible for Canadian society
as a whole, in an inevitable conflict of interest.

Hourigan J.A. did not interfere with the trial judge’s finding regarding the sui
generis fiduciary duty as he saw no error in her analysis, and held the ruling was
consistent with binding precedent.

(3)

Given his conclusion that there was no fiduciary duty owed in the circumstances of this
case, Hourigan J.A. found it unnecessary to decide whether Crown immunity was
available. Accordingly, he declined to do so.

(4)

Hourigan J.A. held the Crown’s submissions regarding the 1990 Limitations Act were
without merit. He found there was nothing in the 1990 Limitations Act that explicitly
referenced treaty claims. Had the legislature intended to target treaty claims, it would
have been a straightforward task to do so, either through an explicit reference or the
inclusion of a basket clause that caught all other causes of action not explicitly
mentioned in the statute.

Further, Hourigan J.A. rejected the thrust of the Crown’s submission that treaties are
synonymous with contracts. He found that while treaties and contracts may share
certain common features, the weight of the authority from the Supreme Court was that
they are very different legal instruments